Correlation Between Old Republic and Custom Truck
Can any of the company-specific risk be diversified away by investing in both Old Republic and Custom Truck at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Old Republic and Custom Truck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Republic International and Custom Truck One, you can compare the effects of market volatilities on Old Republic and Custom Truck and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Old Republic with a short position of Custom Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Custom Truck.
Diversification Opportunities for Old Republic and Custom Truck
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Old and Custom is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and Custom Truck One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Custom Truck One and Old Republic is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Old Republic International are associated (or correlated) with Custom Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Custom Truck One has no effect on the direction of Old Republic i.e., Old Republic and Custom Truck go up and down completely randomly.
Pair Corralation between Old Republic and Custom Truck
Considering the 90-day investment horizon Old Republic is expected to generate 4.99 times less return on investment than Custom Truck. But when comparing it to its historical volatility, Old Republic International is 3.61 times less risky than Custom Truck. It trades about 0.4 of its potential returns per unit of risk. Custom Truck One is currently generating about 0.56 of returns per unit of risk over similar time horizon. If you would invest 363.00 in Custom Truck One on August 30, 2024 and sell it today you would earn a total of 237.00 from holding Custom Truck One or generate 65.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Republic International vs. Custom Truck One
Performance |
| Timeline |
| Old Republic Interna |
| Custom Truck One |
Old Republic and Custom Truck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Republic and Custom Truck
The main advantage of trading using opposite Old Republic and Custom Truck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic position performs unexpectedly, Custom Truck can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Custom Truck will offset losses from the drop in Custom Truck's long position.| Old Republic vs. Axa Equitable Holdings | Old Republic vs. American International Group | Old Republic vs. Arch Capital Group | Old Republic vs. Sun Life Financial |
| Custom Truck vs. PROG Holdings | Custom Truck vs. McGrath RentCorp | Custom Truck vs. HE Equipment Services | Custom Truck vs. GATX Corporation |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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